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New RAND Study Finds That Dirty Air Increases Hospitalizations and Substantially Raises Medical Costs For Public And Private Healthcare Insurers

TROY, MICHIGAN – In new findings, a RAND research study on the financing of pollution-related medical care reveals that California's failure to meet federal clean-air standards cost public healthcare purchasers, such as Medicare and Medicaid, and private health insurers more than $193 million for hospital care alone from 2005 to 2007.

Improved air quality, the RAND report says, would have prevented an estimated 29,808 hospital admissions and emergency-room visits throughout the state during that time period and lowered overall spending on hospital care by $193 million. The study attributes nearly three-quarters of the potentially preventable acute events to reductions in the ambient levels of fine particulate matter. The rest of the events are attributed to reductions in ozone.

The study results suggest that stakeholders of public programs stand to benefit substantially from improved air quality, and that insurance companies and employers also may have sizeable stakes in lower pollution levels.

The RAND study was sponsored by the William and Flora Hewlett Foundation, and the research was conducted in RAND Health, a division of the RAND Corp. The Kresge Foundation has underwritten a communication strategy targeted at the healthcare industry, including payers and providers, to raise their awareness of the public-health dimensions of pollution-related respiratory illness. A complementary strategy is aimed at creating an echo chamber of advocacy and community groups.

“The Kresge Foundation is interested in helping to advance the case that environment quality has be considered when we discuss how to improve the health of the nation’s children and adults,” says David D. Fukuzawa, the foundation’s health program director. “The RAND report goes a long way in confirming that link.”

Although air pollution is known to be detrimental to human health, with adverse effects that include emergency-room visits and hospitalizations, little is known about the financing of such pollution-related medical care. To find out, RAND Health researchers selected California, a state known for its high levels of particulates and ozone, to assess the cost of dirty air, exclusively as it relates to hospital care, for healthcare purchasers.

From 2005 to 2007, the research team analyzed hospital admissions for respiratory and cardiovascular causes, and emergency-room visits for asthma throughout the state. Epidemiological studies and actual pollution patterns were used to determine how meeting federal air-quality standards would affect the number of acute health events requiring hospital care. The researchers looked at actual patterns of hospital care to determine the potential reductions in care delivered at specific hospitals. Finally, they used actual spending patterns to quantify the cost, and therefore the potential spending reductions, for different types of payers.